Argument: Large stimulus is appropriate for large economic crisis
Scot Lehigh. "A large stimulus bill for large problems". The Boston Globe. February 6, 2009 - PRESIDENT Obama's call for a large stimulus plan is under assault by arguments as unpersuasive as they are uninformed.
Is the stimulus plan large? Yes, and with good reason. Our economic problems are as well.
With consumers poorer from $6 trillion in vanished housing wealth and $7 trillion in vaporized stock value, we're set to suffer annual losses in overall economic activity of a trillion dollars this year and a trillion or more next year.
It's not just consumer spending that has collapsed. Other traditional generators of economic growth - business investment, housing construction, and exports - are all anemic. You can trace the effects of the sharp economic contraction in frequent stories about massive layoffs.
That leaves government spending as the nation's best hope for softening a major downturn. To address a projected loss of more than $2 trillion in economic activity, Congress is debating an overall stimulus package of $819 billion to $900 billion. Although those figures sound large, on a dollar-for-dollar basis they would plug less than half the growing hole in the economy. So the stimulus size is hardly excessive - and conservatives' calls for cutting it back make little sense.
Put another way, over the last 12 months, we've lost 2.6 million jobs. We would have needed to add 1.5 million just to accommodate the growing workforce, notes Lawrence Mishel, president of the Economic Policy Institute, a liberal Washington research group. Thus we're at least 4 million jobs away from economic health - and we are likely to lose millions more. Against that need, the stimulus plans are estimated to create or maintain a total of 3 to 4 million jobs.
National Economic Council Director Lawrence Summers - "We believe that this is a properly sized approach to move the economy forward."